Health reform comes with perks, penalties for businesses

The sweeping health care reform bill President Barack Obama made law in March continues to stir debate.

Those discussions are also heating up for business owners as they try to wrap their collective heads around the roughly $1 trillion plan extending coverage to millions of uninsured people and changing the way Americans get and pay for medical coverage.

Marjorie Baldwin is a health economist with the W.P. Carey School of Business at Arizona State University who recently gave her thoughts on the impacts the law will have on businesses.

Baldwin, who took part in the White House Health Reform Task Force discussion this past summer, said it comes with a hefty price tag.

"This is a huge bill with obviously many, many details, and it's going to have a lot of unintended consequences that we're not anticipating," she said. "The one thing I will say for certainty with this bill is it's going to cost more than anticipated. That's what happens anywhere in any country or any state that has tried this universal coverage."

The Washington Post and the Associated Press published a short list outlining the new law for small businesses and what it means to them.

Companies are not required to offer insurance but they do face a $2,000-per-employee annual fee if the government ends up subsidizing workers' coverage. Businesses with less than 50 employees are exempt.

Tax credits beginning this year will be available to employers with 25 or fewer employees with average annual wages less than $50,000. The credits rise in 2014 and max out at 50 percent of the cost of premiums businesses offer with 10 or less employees.

It forces states to create insurance exchanges by 2014 and allows businesses with up to 100 employees to pool workers to bolster their negotiating clout with insurers.

And it opens the door for self-employed people to use the exchanges to help cover the costs of premiums up to 30 percent, according to the list. "The overall bill, because it expands coverage and requires coverage of people with pre-existing conditions and so forth - the perceived wisdom is that healthcare costs are going to increase," Baldwin said. "That means insurance premiums are going to increase, so businesses are likely to see increases in the costs of health care insurance that they provide."

The U.S. Chamber of Commerce opposes the bill.

Chamber Chief Executive Officer Thomas J. Donohue said in a press release the bill "fails to fix what is broken and risks breaking what already works.

"It will drive up health care costs and make coverage less affordable for businesses and families."

Maurer believes business owners are still trying to digest it and get some information from their insurance companies.

But Baldwin believes some business might drop medical coverage.

"It will be an increasing number of employers who potentially could choose not to offer health insurance but to pay the penalty instead," she said.

Brian Hoefle has a different perspective.

Hoefle, chief financial officer for Yavapai Regional Medical Center, said he couldn't imagine the hospital dropping benefits because of the potential staffing losses.

The point Hoefle makes is that if the hospital hypothetically cut coverage to its roughly 1,800 employees, that would push at least some of them to go to another hospital with benefits.

"I can absolutely see a nurse, a single mother with a couple of kids, looking at the loss of health care benefits with her current employer and the availability of those benefits with another comparable employer to be incentive enough to move," he said.

Baldwin explained businesses began offering health benefits around World War II as an incentive to lure employees, and that now creates problems as people rely so heavily on the benefits.

"Because the market is driven by large employer-provided plans, many of these people just can't afford health insurance," she said. "It's the link to employment that creates many of the problems we have. I would actually move in the opposite direction of saying it's an individual's responsibility and taking some steps that would make it more affordable for individuals to purchase their own health insurance and the type of coverage that they want and they need."